The Nigeria Civil Aviation Authority (NCAA) has commenced discussions with the federal government on the possibility of reducing the cost of aviation fuel through local refining of the product. The NCAA is also pushing for the practicability of granting the oil marketers and airlines the concession for lower exchange rates.
The move was sequel to the challenges confronting Nigerian airlines due to the high cost of aviation fuel and exchange rate, which have made it difficult for the operators to carry out major maintenance checks overseas and acquire aircraft spares.
It is feared that the high exchange rate may force Nigerian airlines to ground their operations as it is becoming increasingly difficult for them to buy aviation fuel, import aircraft parts and carry out compulsory checks, which are largely done overseas.
Aviation industry sources hinted that in the next few months, the refineries would start refining petroleum products. It was gathered that the NCAA and the Minister of State for Aviation, Senator Hadi Sirika have made a special appeal to the managers of the refineries that Warri Refinery be dedicated to Jet A1 refining.
Also, the NCAA is seeking a reduction in taxes paid by the airlines, aside a review of the charges leveled on airlines, and has secured waiver on taxes airlines pay on importation of aircraft parts in addition to the waiver on tariffs.
Specifically, the NCAA is said to be pushing for a zero tax on imported aircraft parts, a development, which would save the airlines huge amounts of money.
Besides, the Authority is also talking with the airlines on merger, which is seen as a key to saving the airlines.
According to sources, not only that merger would give the airlines economy of scale, it would also reduce their total expenses and maximise load factor because instead of two airlines deploying two aircraft from Lagos to Abuja at the same time they would deploy one, which would safe fuel, the wear and tear of the equipment and even charges.
The regulatory authority is also working with the Ministry of Transportation to promote code-share between Nigerian airlines and foreign carriers that operate into the country and there are advantages to this arrangement.
Besides technical training and technology transfer which the foreign airlines can give to the local airlines, domestic carriers can sell foreign airlines tickets as their local representatives and airlift their passengers from major airports to other destinations in the country.
Spokesman of NCAA, Sam Adurogboye told THISDAY that the authority is looking at various ways to help the airlines survive these challenging times.
Adurogboye said if the airlines agree to merge, it will save them from going under adding “airlines can work together so that instead of three airlines going to Abuja after the peak period, one flight can be deployed and passengers that bought the tickets of other airlines can go with the same aircraft and there will be a clearing house where the airlines will sort out the differences.”
He said this would also save them fuel and other expenses and above all, adding, of one airline going from Lagos to Abuja with 50 passengers, all the passengers would use one aircraft and fill it up, so there would be full load factor.
“We also do a lot of other things for the airlines. NCAA paid about N10 million recently for airlines so that they would do gap analysis with the International Air Transport Association (IATA). But the airlines have to improve in their schedule and passenger care because these foreign airlines cannot partner with you if you don’t have passenger care. On regulation we have also laid out so many procedures and ensure that airlines cannot take out their aircraft without approval from NCAA,” Adurogboye said.
He added that the airlines actually generate huge revenues from their tickets and ought to pay for the charges, which their foreign counterparts also pay, but noted that the difference is in corporate governance.
“When you run airline business you don’t have to diver fund to any other things or business because airline business is capital intensive with very low profit margin. We believe that with our support the airlines would survive this hard period,” Adurogboye stressed.